A legal dispute has arisen between Danske Bank and the liquidator of Bloxham stockbrokers over the remaining assets of the firm, which include €4 million from the sale of its client book to rival firm Davy.
Bloxham was wound up in 2012 following the discovery of financial irregulatories.
Danske claims to have a floating charge on the firm’s assets through some €34 million in loans lent to former partners and the brokerage itself by National Irish Bank, which was later acquired by Danske.
Bloxham’s receiver, George Maloney, filed an affidavit with the High Court last month in support of the bank’s claim for priority payment.
The court is scheduled to hear the case over three days, starting next week.
Danske is also pursuing Bloxham’s former partners individually for partnership buyout loans.
It has secured judgment of €3.7 million against Patrick Finnegan, Bloxham’s former head of private clients, and €3.5 million against its former head of asset management Niall Tinney. Mr Tinney has appealed the judgment to the Court of Appeal, alleging the bank was negligent in lending the money to him in the first place. The bank has cases pending against two other former partners.
Regulatory reserve
Bloxham was put into liquidation in 2012 following the discovery of a €5.2 million shortfall in its accounts, which effectively meant it had been trading without the required regulatory reserve.
The shorfall seems to have escaped its auditor Deloitte, which signed off on several sets of annual accounts in the period leading up to the firm’s collapse.
The Chartered Accountants Regulatory Board (Carb) plans to investigate Deloitte’s role in the controversy.
Bloxham’s 17,000 private clients were transferred to Davy Stockbrokers along with its fund management business as part of the wind down.
In 2013, Bloxham’s liquidator Kieran Wallace sued unsuccessfully for some €6 million in funds, which would have been due to Bloxham had it not gone into liquidation from the demutualisation of the Irish Stock Exchange.
Expected benefits
Mr Wallace had brought proceedings against the stock exchange alleging that the termination meant Bloxham would lose some €6 million in expected benefits from a proposed restructuring at the institution, intended to allow founder members to benefit from its €45 million reserves.
In May last year, the Central Bank disqualified Tadhg Gunnell, Bloxham’s former in-house accountant, from managing a financial firm for 10 years and fined him €105,000 over his role in the Bloxham controversy.
The disqualification order was the longest ever imposed on an individual by the State’s financial regulator.
